At two-week high with eyes on Brexit negotiation, Trump’s recovery

Christel Deskins

GBP/USD flirts with 1.3000 amid broad US dollar weakness, mild risk-on mood. Odds favoring no-deal Brexit gradually recede as EU-UK policymakers talk business. UK PM Johnson stays optimistic to overcome the pandemic, Sunak sounds a bit skeptic. Trump gasps, fuels rumors of not being “20-year younger” after the COVID-19 treatment […]

  • GBP/USD flirts with 1.3000 amid broad US dollar weakness, mild risk-on mood.
  • Odds favoring no-deal Brexit gradually recede as EU-UK policymakers talk business.
  • UK PM Johnson stays optimistic to overcome the pandemic, Sunak sounds a bit skeptic.
  • Trump gasps, fuels rumors of not being “20-year younger” after the COVID-19 treatment at Walter Reed.

GBP/USD stays positive around 1.2990, intraday high of 1.3000, while heading into the London open on Tuesday. The pair benefits from broad US dollar weakness, amid mild optimism, despite fresh concerns over American President Donald Trump’s health. The reason could be traced from increasing odds of a soft Brexit as well as UK PM Boris Johnson’s optimism that the vaccine will be out soon.

Although Brexit talks in London are yet to convey major updates, the readiness of the European Union (EU) and the British policymakers to give a final push towards the soft departure favors the Cable buyers. While spotting the same, Morgan Staley’s probabilities for a mixed trade deal with limited benefits surge 10% to 70% off-late.

On the other hand, UK PM Johnson said, “We are working hard to get a vaccine, we feel they must on the verge of getting one.” However, his comments like, “there are clearly tough times ahead,” probes the bulls.

Also in the line could be statements from British Chancellor Rishi Sunak who refraining from promising any good news before Christmas while citing a halfway through the coronavirus (COVID-19) crisis. Mr. Chancellor additionally reiterated his dislike for China while saying, “Britain must take a hard-headed, transactional approach to its relationship with China”.

In the US, President Trump tried to flaunt his recovery, via a video, after stepping out of the Walter Reed but was rather caught gasping. The same renewed doubts over the Republican leaders’ health and probed the earlier market optimism. Even so, the trading environment remains mildly positive amid hopes of further stimulus from the US as well as a light calendar in Asia.

While portraying the risk stand, stocks in Asia-Pacific print gains below 0.50% whereas the US 10-year Treasury yields remain mostly unchanged around 0.77%.

Looking forward, GBP/USD traders may pay a little attention to the September month UK Construction PMI after Monday’s upbeat Services PMI. Though, any updates from London will be closely followed for fresh impetus. Further, news relating to Trump’s health and comments from Federal Reserve Chairman Jerome Powell, from the National Association of Business Economics annual meeting, will also be important to watch.

Technical analysis

The resistance line of a short-term rising wedge joins 200-bar SMA to highlight 1.3015/20 as the key upside barrier.

Read: GBP/USD Price Analysis: Refreshes 12-day top but rising wedge on 4H probes the bulls

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